Tribes in Arizona May Have Opportunity to Participate in State’s Implementation Plan for the EPA Clean Power Plan

Monday, April 27, 2015

Arizona Governor Doug Ducey signed into law SB 1007, which authorizes the state to include tribes in any state plan to implement the U.S. Environmental Protection Agency’s proposed rule to reduce carbon dioxide (CO2) emissions (also known as the EPA Clean Power Plan). Amending Title 49 of the Arizona Statutes, SB 1007 lays out specific requirements for the Arizona Department of Environmental Quality (ADEQ) to comply with the EPA final rule, which is expected to be issued in the summer of 2015. In addition, the law requires ADEQ to consult with the Arizona Corporation Commission (ACC), investor owned utilities, and independent power producers to develop the state’s implementation plan. It also authorizes the ADEQ to participate in regional or multi-jurisdictional plans. And, in a nod to the role Arizona tribes can play in helping the state meet its expected EPA requirements, the law authorizes ADEQ to enter into plans or agreement with Arizona tribes as part of the state’s implementation plan.

The EPA announced its proposed rule to reduce CO2 emissions from existing power plants in June 2014. On a national scale, the rule calls for 30 percent reduction in CO2 emissions against 2005 baselines by 2030. The heart of the rule is of course the overall reduction in CO2 emissions on a state-by-state basis.

In Arizona, the Clean Power Plan calls for 50 percent reduction in CO2 emissions by 2020, and 52% reduction in emissions by 2030. Stated in terms of CO2 pounds per Megawatt hour (lb/MWh), the Clean Power Plan calls for total reductions of 718 lbs/MWh by 2020 and for a 751 lbs/MWh reduction by 2030. Those reductions are stated in total terms against a 2012 baseline, so they are cumulative not additive. According to the proposed rule, ADEQ’s initial implementation plan is due by June 3, 2016 – approximately 13 months from the estimated date of the final rule – and the complete plan is due no later than June 30, 2017 or June 30, 2018 if it is part of a multi-state plan.

Many commenters have remarked, and readers may immediately spot, that these reductions are heavily weighted toward the “interim” compliance deadline of 2020. In short, almost all of the reductions are expected to occur a scant five years from now. Many of the initial discussions between EPA, the states, and utilities have centered on softening this approach to make it more a “glide path” and less a “cliff.” EPA has so far indicated that it will indeed soften the initial compliance targets. As our previous blog post indicated, there is now even more pressure on EPA to soften the deadlines as NERC indicates that more time will be required to meet the Clean Power Plan reduction targets.

Nevertheless, should the Clean Power Plan avoid the initial legal challenges and proceed to finalization, the States will potentially have considerable difficulty reaching CO2 reduction targets by 2030. The Clean Power Plan does allow some flexibility to meet these targets.

That flexibility comes in the form of what the Clean Power Plan dubs “Building Blocks” and the multi-jurisdictional manner in which those Building Blocks might be implemented. Building blocks are essentially programs designed by EPA, and proposed in the Clean Power Plan, to assist States in reaching their CO2 reduction targets. The Building Blocks, in a nutshell, include four programs to: (1) improve heat rate efficiency; (2) increase natural gas capacity factors (re-dispatch from coal fired to gas fired); (3) expand renewables and other zero carbon emitting sources; and (4) increase demand side efficiency. These building blocks can be utilized by States alone or in regional or multi-jurisdictional plans to meet CO2 reduction targets.

In November, 2014, the EPA issued a proposed supplemental rule for carbon emission reduction in Indian Country. The proposed rule sought comments on three issues – two of which are most relevant to tribes: 1) whether the EPA should adopt the same methodology and building blocks for reducing carbon emissions on affected tribal lands; and 2) whether tribes (and other jurisdictions) without affected electricity generating units (EGUs) should be able to participate in regional or multi-jurisdictional plans.

As identified in the proposed rule, there are three tribes that have affected EGUs located on their lands – Navajo Nation, Fort Mojave Tribe, and the Ute Tribe of the Uintah and Ouray Reservation. Thus the first issue only applies to these three tribes. However, the second issue raised by the EPA applies to all tribes. Presumably, the EPA sought comment on the whether tribes without EGUs can participate in another jurisdiction’s plan because if there are no EGUs in a tribal jurisdiction, there is no need to develop a tribal implementation plan. Furthermore, tribes must request and be approved for Treatment as State status under the Clean Air Act to be able to implement its own tribal plan. The key question then remains whether, without an affected EGU and more importantly, without a tribal implementation plan, can tribes participate in other state implementation plans? The EPA has posed the possibility of creating a federal implementation plan for tribes as an alternative to support tribal participate in a regional or multi-jurisdictional plan.

Based on the four proposed Building Blocks for a state plan, the one most likely to involve tribal participation is Building Block 3: increase renewable energy or low-no carbon emitting energy sources. The Arizona tribes’ abundant renewable energy resources have the most to offer the state in meeting its CO2 emissions goals, and position many Arizona tribes to participate in the state’s implementation plan through developing renewable energy projects on tribal lands.

Given the EPA’s lack of a position – for now – on whether tribes must have their own implementation plan or a federal implementation plan, it is unclear how Arizona tribes will be able to participate in the state’s implementation plan to meet the EPA CPP requirements. The Navajo Nation has submitted comments to the EPA, supporting the position that tribes should not have to develop a tribal plan in order to participate in a state plan. ADEQ also submitted comments encouraging tribal participation in state, regional, or multi-jurisdictional plans. Unfortunately, no other Arizona tribes commented on this issue in the proposed rule. Despite the fact that the EPA comment period is closed, the tribes still may be able to leverage the government to government relationship (and consultation requirements) with the EPA to continue the discussion about participating in state implementation plans.

Regardless of the current EPA uncertainty, Arizona tribes might consider immediately engaging ADEQ, ACC and their utility providers to identify some of the ways tribes can participate in the state’s implementation plan. ADEQ has begun conducting stakeholder meetings to inform development of the state’s implementation plan (information about the stakeholder process can be found here), and tribes interested in participating in a state plan should consider engaging in this stakeholder process. Because the state will only have approximately one year after publication of the final rule to develop a plan, time is of the essence for tribes to participate in the state’s stakeholder discussions and determine how their land and renewable energy resources can help reduce CO2 emissions in the State of Arizona.

Mr. DeVoe is in the firm’s Government and Regulatory Affairs practice group. His practice is focused ‎on environmental litigation and compliance, natural resources law, and water rights. He represents ‎private and public companies in virtually all facets of environmental compliance, environmental ‎planning, environmental due diligence, and risk management. Mr. DeVoe specializes in air quality ‎compliance, air quality regulatory defense, and air quality litigation matters. He also has broad ‎experience with environmental matters ranging from water quality to endangered species,...

Pilar Thomas is Of Counsel in the firm’s Gaming, Tribal Affairs and Gaming, and Tribal Lands and Natural Resources practice groups. Her practice is focused on Indian law, tribal renewable energy project development and finance, tribal economic development, and Indian gaming.

She assists clients with strategic legal advice on tribal energy policy and planning, renewable energy project development and finance, federal and state energy regulatory, programs, and policy efforts, tribal gaming regulations, gaming-related transactions, litigation, and other business and economic development efforts.

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